AUD and NZD: Fundamentally attractive near term - Westpac

According to the Financial Markets Strategy Team at Westpac, the Aussie and the Kiwi look positive in the short-term, but hey warn that much of what happens will depend on the US dollar outlook. 

Key Quotes: 

“AUD/USD looks an attractive buy in the 0.7100-0.7200 zone. Last week’s upbeat RBA (boosting its 2018-2019 GDP forecasts to a solid 3.5%yr and brushing off the low Q3 CPI), continuing commodities rally, and still extreme short-positioning are all AUD-supportive, although as always, much will depend on the USD’s outlook. Assuming the latter remains stalled (DXY around 97.0), there is potential for a break above 0.7300 technical resistance which would signal a further 1c-2c rise.”

“Markets will be focussed on Q3 wage (Tue) and Oct employment (Thu) data this week.”

“NZD/USD also has crowded speculative shorts supporting it for a another push higher to 0.6850. The local data calendar is low key, but recent strong data plus the RBNZ’s hawkish shift should continue to resonate.”

“Longer term, though, we are sticking with our view that the USD will strengthen further given another four Fed rate hikes. AUD/USD and NZD/USD are expected to be below current levels in 2019.”